Study: Global LPs prefer Asia

Asia is the most attractive market for LPs worldwide, and a majority of LPs seek greater alpha through new partnerships, according to a CEPRES survey.

Asia has become the key investment region for LPs worldwide, according to a recent study by research firm CEPRES, which surveyed 199 GPs and LPs globally.

According to the report, 34 percent of LPs favoured Asia for investment compared to 27 percent that preferred Europe and 24 percent for North America.

In addition, LPs are seeking higher alpha through a significant shift towards commitments with GPs they have not previously invested with, the study said. About 93 percent of LP respondents said they were targeting new GP relationships, a sharp increase from the 65 percent of the previous survey.

Despite global financial uncertainty and the slow or slowing growth in all the world's major economies, LPs are keen to invest. According to the study, 92 percent of LP participants claimed to be planning new investments, as compared to only 70 percent in the last survey.

“The global private equity markets are increasingly diverse and LPs are in the driving seat,” said Daniel Schmidt, managing partner at CEPRES, in a statement. “Most LPs are now assertive in choosing diverse strategies, sectors and countries to invest and often supplement funds with co-investments and their own direct investments to further refine the risk, return and liquidity of their PE portfolio.” 

The study also found that respondents believed investment terms will further improve in favour of LPs, something predicted by 67 percent of LPs and 75 percent of GPs.

In addition, fundraising continues to be slow, with 40 percent GPs estimating it takes 18 months or longer to rasie a fund and 46 percent of LPs saying they spend more than six months on due diligence.